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Sunday, August 02, 2009

Sponsorship Reform in Bahrain

Sponsorship reform could be GCC wide.

Bahrain’s new sponsorship law, giving expatriate workers similar freedoms to Bahraini nationals, has the support of labour ministries across the Gulf, the Bahrain labour minister has said.

But, HE Dr Majeed Al Alawi added, “huge lobbying from the private sector” has to date prevented them from going ahead.

As revealed by Construction Week in April, Bahrain will become the first Gulf state to abolish its existing sponsorship system, allowing foreign workers to switch jobs without the consent of their previous employer, from August 1.

The move represents a substantial shift in a sponsorship system that is common across the GCC states.

“All ministers of labour in the Gulf believe in what I am saying,” Al Alawi said. “But, in the next five years, most of them will do exactly what we are doing now. Kuwait, Qatar and the UAE will be the first to jump.”

But the new law, which will bring Bahrain more in line with international labour standards, has met with fierce resistance from sections of the business community.

The Bahrain Chamber of Commerce and Industry has pushed to delay the legislation, claiming that, if an employer has bankrolled its employee’s relocation, the employee would be free to resign at any time, rendering the new legislation economically unfeasible.

And parliament has risen alongside the business communuity, bidding to postpone introduction of the law until 2010.

But Al Alawi has remained steadfast. “There is strong opposition from employers, but it is good for the market.”

“It will end the black market for illegal visas and will raise salaries, because workers will have an option to go to employers who will treat and pay them better.”

Gulf Research Centre senior economics researcher Dr Samir Pradhan hailed the move. “This law will be a milestone in the region,” he said. “Both in the short and long run, it will be highly economically beneficial.

“It will make the case for a competitive labor market with clear signals regarding exact supply-demand fundamentals.”

Pradhan called private sector opposition in the GCC “highly presumptuous” and said it was highly likely that other GCC states will follow Bahrain’s example “given the incessant international pressure for labor reforms.”

Under the new law, expatriate workers will be allowed to move to another job by giving three months notice and adhering to the terms of their contract.

If a contract ends, then employees will be given one month to find a new job, during which time they will be paid unemployment benefits, Al Alawi confirmed - Benjamin Millington , August 2nd, 2009.